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Montenegro

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MONTENEGRO


  
  

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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $
         
GNI per capita
 US $ 106
Ranking is given out of 208 nations - (data from the World Bank)


Update No: 111 - (25/08/06)

Montenegro is a splendid place, just south of Croatia on the Adriatic with magnificent mountain scenery. It has a great future as a tourist centre. It may even have huge oil reserves offshore, a secret better kept until after recently-declared independence in July. 
On May 21st, Montenegro voted to break up its union with Serbia, thus becoming the world's newest independent state. Montenegrins were asked if they wanted to end their loose union with Serbia, set up in 2003 to replace Yugoslavia. As many as 55.4 per cent of voters said 'yes'. The pro-independence bloc needed 55 per cent of the votes cast to ensure victory.
The hope, held both by locals and by foreign investors, is that independence from Serbia, leaving that country's political isolation behind, will increase Montenegro's access to foreign funds. 
Montenegro has few scruples about financial matters. Monte Carlo is bone fide by comparison. It is a potential Liechtenstein; it just has to declare itself a tax haven and it would become a magnet for funds fleeing to the Balkans. Perhaps the Russian investors busy 'buying it up' have just that in mind? They have shown a predeliction for exporting their money to small 'Orthodox' destinations. Cyprus the great beneficiary in the 1990's being the most famous, but now in the EU having to behave itself, in terms of money laundering, etc.
And then there is the tantalizing prospect that it has oodles of oil off its coast in the Adriatic. Oil reserves there were reported in the late 1990s as being of the order of one billion barrels, little has been heard of the matter since, but now that the political issue is resolved…… perhaps a Kuwait rather than a Liechtenstein is emerging?
The US Agency for International Development and European Agency for Reconstruction are major contributors of infrastructure-related aid. The EU beckons as the ultimate destination.

Rehn holds separate talks with Djukanovic, Kostunica
EU Enlargement Commissioner Olli Rehn held separate meetings with the Prime Ministers of Montenegro and Serbia in late May, focusing on the outcome of Montenegro's independence referendum and the stabilization & association negotiations with the European Union.
Montenegrin PM Milo Djukanovic went to Brussels for talks with Rehn and the EU foreign policy chief Javier Solana. High on the agenda of the talks with EU senior officials were the results of the referendum in Montenegro, when the Montenegrins voted to split from Serbia.
Shortly after the vote, the EU said it would respect the will of Montenegrin citizens, noting that it will open separate negotiations with Podgorica over the stabilization and association agreement (SAA).

Parties square off for poll 
Seven political coalitions and two individual parties will run in Montenegro's 10th September parliamentary election.
The election is the first since the tiny republic voted for independence and separation from Serbia in the May 21st referendum. Prime minister Milo Djukanovic's Democratic Party of Socialists will retain its current coalition partner, the Social Democrats, possibly adding the Croatian Civic Initiative (which represents minority Croats.)
Nine pro-Serbian parties, headed by Socialist People's Party (NSP), which opposed Montenegro's independence, have split into two coalition groups, and there are several coalitions of small, marginal parties. 
Only the recently founded Movement for Change (MC) and the Democratic Union of Albanians (DUA) will run alone for the 81-seat parliament. The MC, headed by economist Nebojsa Medojevic, last month transformed itself into a political party from a popular non-governmental organisation (NGO), the Group for Change. Pro-European, it is seen by political analysts as potentially the strongest challenger to Djukanovic's rule. 
The NSP coalition, headed by Predrag Bulatovic, is seen as another serious challenger. 
Ethnic Albanians account for about five per cent of Montenegro's 620,000 population and their votes are likely to be won by the DUA.

Hungary OTP submits binding bid for Montenegro's Crnogorska komercijalna banka
Foreigners are showing a renewed interest in Montenegro now that it is independent. The Hungarians in particular envy it its coastline on the Adriatic, its possible oil reserves and the new élan it has acquired from independence.
Hungary's OTP Bank announced on August 18th that it has submitted a binding bid for the purchase of a majority, at least 80.0% shareholding in the Montenegrin Crnogorska komercijalna banka AD (CKB). 
Currently CKB is the most dominant player of the Montenegrin banking sector; its market share exceeds 43%, in line with its total assets reached 303.7 million Euro at the end of 2005. 
"OTP Bank's binding bid contains the price and the draft sale and purchase agreement, as well. The binding bid was submitted after OTP Bank's acquisition team, together with the legal advisor Berecz&Andrékó Linklaters and financial auditor Deloitte Touche Tomatsu carried out a due diligence on CKB," OTP said in a statement on the website of the Budapest Stock Exchange (BSE).
Much more foreign interest can be expected from further afield.
Montenegro, once the playground of celebrities like Richard Burton and Sophia Loren, is attracting attention because the no-frills airlines are thought to be coming soon. Already the scenic port of Kotor, just south of Dubrovnik, has all but been taken over by Germans, Italians and, most recently, Russians.

The Russians are coming to town, including Luzhkov
Montenegro's first five-star hotel has opened its doors on the outskirts of the Budva holiday resort on the Adriatic coastline. The Russian owners have spared no expense in the luxury refurbishment of the once rundown Hotel Splendid.
A few kilometres to the south, another Russian investor has bought the Hotel As. An establishment promising the ultimate in accommodation is in the making, including a spectacular underwater restaurant. Parts of the hill abutting the hotel are to be blasted to make way for the building works.
"The Russians are coming," is the order of the day in Montenegro and its northern neighbour, Croatia. Money is no object to these new investors, the real estate agents say. "If you've got it, flash it," is the motto.
A Russian investor has demanded a change in the local building regulations on the Croatian island of Mali Losinj so that he can extend his hotel to 2,100 beds from the current 1,200.
In Herceg Novi at the entrance to the Bay of Kotor in Montenegro, a Russian consortium has bought a vast property of 100,000 square metres in a prime location. The property is on the Lustica peninsula, which used to be a military zone covering 36 square kilometres and has thus not been developed for tourism.
These top holiday locations have drawn the attention of well-to-do Russians in particular. According to media reports, Moscow Mayor Yuri Luzhkov has bought more than 12,000 square metres for 4 million Euro. A short distance away, Russian cosmonaut Alexei Leonov also owns property.
Russian money has helped drive real estate prices ever higher. In the Montenegrin city of Tivat, residential property now costs up to 1,200 Euro a square metre - this when the average monthly income is a meagre 200 Euro. In other towns prices as high as 2,000 Euro per square metre have been attained for commercial property.
This does not appear to deter the richest investors, who arrive at Montenegro's two airports in private jets, according to locals.
Nobody knows precisely how many properties are now in the hands of Russian investors; often the ownership is difficult to ascertain, as the trail leads through accounts and companies all over the world.
Western diplomats have warned that money from suspect sources is being "laundered and parked" in the region. They note that Croatia and Montenegro hope in the relatively near future to become members of the European Union, and in Montenegro the euro is already the currency in use.
Russian investments in Montenegro are, according to this view, now so large that they could undermine the tiny country's independence. Often it is plain for all to see that the Russian owners are scarcely interested in the tourist trade.
At Petrovac, in the far south, Russians bought the Hotel 4th July and left it standing unused for four years. "They are simply waiting to launder their dirty money," a restaurant owner in the area says.
The flood of money from Russia has also meant a change in the origin of the guests in many Adriatic resorts. Russians currently set the tone, rather than Germans, Austrians or Britons. 

                                      ******
The following, indeed, indicates the rich property opportunities opening up for Montenegro:-

Montenegro: Independent and in demand
By Eric Jannson, International Herald Tribune
Crammed onto a narrow crescent of land beneath the sheer cliffs of Boka Kotorska, Europe's southernmost fjord, Montenegro's ornate city of Kotor hides behind a fortress wall six centuries old. 
But, even as Montenegrins celebrate their recent vote to become the world's newest independent nation, a foreign force is streaming across the border from Dubrovnik, Croatia, making a beeline for the fjord and marching in past the winged lion of Saint Mark, a sculpture in stone that stands by Kotor's gate. 
Following a flurry of rapturous reports in the media, property shoppers from Britain and Ireland are arriving in droves to scour the Boka Kotorska area for affordable coastal villas. 
"Driving around the Boka bay after flying into Dubrovnik fairly takes the breath away, and many come with the hype given by media hell bent on selling Montenegro as a destination where property on the sea can be bought cheap," said Robin Gellately-Smith, a property manager and architectural expert for Total Group, a Kotor-based real estate agency. 
But if there ever was such a thing as a discount villa in Montenegro, there are none any more. Decrepit stone ruins on hillsides overlooking the Boka Kotorska still can be bought for as little as 20,000 Euro, or US$25,760, but modernization is expensive and difficult. 
And, while the country's nascent property market is not yet indexed, most local real estate agents say prices have risen 50 to 60 per cent or more in the past two years. 
Prospective buyers are better off shedding unrealistic price expectations and searching instead for genuine quality around the fjord, Gellately-Smith said. 
Montenegro's planners have earmarked the land bordering the butterfly-shaped body of water for minimal development. In contrast, other sought-after destinations along the Adriatic, like Sveti Stefan and Budva, show the scars of illegal building that took place over the past 15 years. "Here on the Boka bay, I think, is where the high-value holiday homeowner will find refuge," Gellately-Smith said. 
Two properties now for sale in the fjord area are representative of the best in the local market. 
One, a three-bedroom apartment inside Kotor's city wall, was sold last year to a British buyer, David Rogers, a semi-retired luxury tour operator. He refurbished the 140-square- meter, or 1,507-square-foot, apartment to a luxury standard unusual for Montenegro and then put it back on the market at 360,000 Euro. 
"That's a fairly senior price, but of course the apartment is big and we have done it up - renovating, repainting, rewiring, everything. We haven't seen anything else like it in Kotor. It's got high ceilings and a lot of light," Rogers said. 
The second property, two renovated 18th century villas being sold as a single hillside complex, is priced at 1.9 million Euro. 
With a total of four bedrooms and 2,000 square meters of terraced gardens, the twin villas in Perast, near Kotor, occupy one of the fjord's most coveted positions, with a clear view of two picturesque islands a short distance offshore. 
"The Perast property is in perfect condition. It is by far the best thing on the market at the moment," said Andrea Marston, general manager at Dream Property Croatia & Montenegro, a British real estate agency that entered the Croatian market four years ago and Montenegro two years later. 
Echoing Gellately-Smith, Marston said the best properties in Montenegro would not sell cheaply, especially because traditional stone buildings in good condition - the kind most buyers want - are in short supply. "All the old stone properties are being snapped up rapidly," she said. 
Yet Marston said she expected prices to continue to rise in all segments of the Montenegrin housing market for the next several years, basing her analysis on the experience of neighbouring Croatia, which is a similar market in many respects. 
"Montenegro is not anywhere near the top of the curve yet. It is still behind Croatia, and prices in Croatia are still increasing, a little bit slower than they once did but not much slower," she said. "Montenegro will catch up with most of Croatia, probably in five years, but it will not catch up with Dubrovnik in the same time." 
(The average price per square meter for properties on the Croatian coast is 1,500 Euro, although prices have gone as high as 5,000 Euro to 6,000 Euro in Dubrovnik.) 
Conscious both of fast-rising prices and the extraordinary natural scenery that Montenegro offers, many buyers are choosing to develop one property with the goal of turning a quick profit and buying another for personal use, local agents say. 
David Sergeant, a publisher from London, is one such recent buyer. "Simply stunned" by the natural beauty around the fjord, he said, he decided to purchase, as an investment, an apartment in Kotor for 290,000 Euro and, for personal use, a villa in the nearby village of Muo for 358,000 Euro. 
"The fast-improving economic and political situation makes Montenegro very attractive, not only as a destination to live in, but also it is a terrific investment opportunity," Sergeant said. 
What some potential buyers may not know is that this country of 630,000 people is far poorer than most of the rest of Europe and, Gellately-Smith said, weaknesses in its infrastructure continue to pose problems. 
For example, water shortages, sometimes acute in July and August, may interfere with the plans of many buyers, like Sergeant, to install swimming pools. "There is plenty of water in Montenegro. It is a matter of getting it where it is needed," Gellately-Smith said. 
A final wild card is the Montenegrins themselves, Gellately-Smith said. "They will not easily give up their land and birthright to foreigners lightly. They have fought against all comers over the centuries to keep their land from foreign occupation, including 500 years of Ottoman aggression," he said. 
"Investors with money buying small houses in out-of-the-way stone villages are bound to experience neighbour frustration as people see friends and family move away to be replaced by wealthy foreigners, modernizing and building swimming pools, only to use the building a few months of the year." 

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FOREIGN COOPERATION

Possible ties with Iran 


Iranian Ambassador to Belgrade, Morteza Mir-Heydari, met with Montenegrin President, Filip Vujanovic, and several other high-ranking Montenegrin officials in Montenegro's capital Podgorica, New Europe reported.
Mir-Heydari also met with Montenegrin Foreign Minister, Vlahovic, and discussed possibilities for opening of bilateral ties, news reports said. High-level Montenegrin officials, which declared independence from Serbia and Montenegro in a referendum held on May 21st, voiced interest in establishing ties with the Islamic Republic of Iran. On Montenegro's National Day, Mir-Heydari handed a message from Foreign Minister, Manouchehr Mottaki, to Montenegrin Foreign Ministry Advisor, Sedik Kalich, which referred to universally recognised principles and Iranian foreign policy with respect to the right of states to determine their own destiny. He also expressed his readiness to establish political ties with Montenegro. Many countries have set up embassies in Podgorica and signed protocols establishing political ties with the newly independent Balkan state.

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